Many American homeowners save thousands of dollars a year by refinancing their mortgages. Freddie Mac, the Federal Home Loan Corporation, has some refinancing deals that are administered by traditional lenders. One Freddie Mac program is for homeowners who, along with their new mortgage, want to get some cash for home improvements. Another is for people who just want lower rates and don't want cash. There also is a program for people with an underwater mortgage, in which the value of the house has fallen below the balance owed on the mortgage.
Choose which program is for you, then learn more about the program and find out if you're eligible for it. For the cash-back and the no-cash-back programs, the Freddie Mac website has charts that list the eligibility requirements, major terms and other details about the programs.
Check out Freddie Mac's offerings in accordance with the Home Affordable Refinance Program if you're underwater. To qualify, you must have a mortgage owned by Freddie Mac or Fannie Mae -- the Federal National Mortgage Association. You're probably making your monthly payments to a bank or other lender, but Freddie Mac can own your mortgage without you knowing it. On its website, Freddie Mac has a look-up tool that can tell you instantly if Freddie Mac owns your mortgage. Then determine whether you meet the other HARP eligibility requirements. You must have a good payment record, with no instances of being more than 30 days late on your mortgage payment in the last six months and no more than one in the past year.
Call your lender or another lender to get the ball rolling on whichever refi program you want. Freddie Mac recommends that you be ready with information and documentation for the lender, including details of your financial situation, proof of your income and a detailed list of your debts. Your lender will steer you through the application process.
Do some careful math before signing your name on a new mortgage. Make sure the new deal really will save you money. While your monthly payments will probably be lower, closing costs can be tacked onto the mortgage. In addition to your monthly principal and interest payments, taxes and mortgage insurance may be part of your monthly payment. Add up all costs and compare them to the total cost of your current mortgage.
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